Intel CEO says convergence key to future

By John K. Waters

02/24/2003

Intel Corp. CEO Craig Barrett doesn't exactly see blue
skies ahead for the IT industry, but he says that he is ''optimistic about
the future.'' The source of his optimism, he said last week during his Intel Developer Forum (IDF) keynote, is the growing need for technological innovation fueled by an inexorable convergence of computing and communications.

''The desire for technology is alive and well,'' Barrett
told conference attendees gathered in San Jose, Calif., for the semi-annual
event. ''Perhaps we have to carry over the hangover of the dot-com bust, but
growth will come from the investments we make in innovations.''

Barrett refrained from making outright predictions for
this year, citing market uncertainties such as a possible war with Iraq and
strained relations between the U.S. and North Korea. But his message about the
future of his industry was resoundingly hopeful. ''The last two years have shown
more clearly than ever that innovation and technology continue to move forward,
even in the face of a weak economy,'' he said.

This is not a new message from the computer industry's
chief chipmaker. ''You never save your way out of a recession,'' Barrett said in
his 2001 IDF keynote. ''The slowdowns are going to end, and you need to prepare
for the upswing'' He declared at the time that Intel would invest approximately
$12 billion in capital expansion and R&D during that year.

The twist on this year's message is the buzzword
''convergence,'' which
Barrett said holds a specific meaning for Intel. ''I want you to think of
convergence as any aspect of our technology coming together,'' Barrett told
attendees. Developers who create products that leverage the combined
benefits of communications and computing will thrive in the future, he
added.

Barrett pointed to Intel's own recent convergence
research on what has been called the ''siliconization of photonics'' to
illustrate his point. The Santa Clara, Calif.-based chipmaker has been working
for some time to integrate optical communications technology with conventional
electronics. In so-called silicon photonics, laser light is used instead of an electrical
current to signal the ones and zeros recognized by a CPU.

In a separate presentation, Intel CTO Pat Gelsinger
demo'd what he called the world's first optical transmission of data via a CPU.
For this demo, a laser beam was sent down an optical fiber that split into two channels. One channel ran through a phase
shifter, which slowed the speed of the light. Thus differentiated, the two light
sources could represent the optical equivalent of ones and zeros.

Chips built with this kind of optical technology would be
smaller and faster, Gelsinger explained, although they are too expensive to manufacture
profitably right now.

Another driver of future growth, Intel's Barrett said, is
the pent-up demand among enterprises for new technology. In particular, he
noted, those companies ''with all of those computers still running Windows 95 or
98 that Microsoft says it will not support at the end of the year,'' which will
be looking to replace some hardware. Barrett said that his own company is
replacing 35,000, or about one-third, of its computers. He also cited recently
announced plans from telecom Lucent to replace all of its PCs as
''an encouraging sign.''

But it won't be enough to support ''aging'' technology,
Barrett said. The key now, as ever, is innovation. ''What we need to do is bring
technology to
the marketplace in a user-friendly environment,'' he said.

Beyond its own product development, Intel has reportedly
invested $25 million in more than 15 wireless networking companies as a kind of
hedge against future competitor innovations, and just generally to accelerate
the spread of wireless networking. Intel also has developed numerous
relationships with hotel chains, telecom service providers and retail outlets,
with an eye toward the hotspot market. Company officials say Intel is currently
conducting extensive verification of public Wi-Fi network access points designed
for use with its Centrino mobile technology. The company expects that several
thousand of these hotspots will be verified by
year's end.

About the Author

John K. Waters is a freelance writer based in Silicon Valley. He can be reached
at john@watersworks.com.